Chipotle can't compete with McDonald's in one key area

Chipotle’s cult following and reputation for fresh and largely hormone-free food has helped it eat into McDonald’s market share.
But Chipotle lags way behind McDonald’s in one key area: frequency of visits.
While consumers claim to care about things like food quality, customisation, and ethics, they’re going to McDonald’s far more often than Chipotle. Figuring out how to get them in the door more often would help the Mexican restaurant, whichhas expanded rapidly, overcome a recent slowdown in its same-store sales growth.
Only 43% of Chipotle consumers visit the brand once a month or more often, according to research firm Technomic. Among McDonald’s customers, 71% say they visit once a month or more often.

About half of Chipotle customers only come “a couple of times a year,” Chief Financial Office John Hartung told investors during an earnings conference call this week.

McDonald’s is still the most visited restaurant for millennials, defined as people aged 18 to 35, according to analysts at Morgan Stanley. Chipotle comes in 11th place.

“Chipotle still has a lot of room for growth,” said Darren Tristano at Technomic told Business Insider. “If they need to drive sales, they could consider serving breakfast or staying open late at night.”

We’ve reached out to Chipotle to find out whether they plan to extend hours in the future and will update if we hear back.

The company’s sales growth is slowing. In the second quarter of 2014, Chipotle reported 17.3% sales growth at stores open a year or more. This year, the company reported 4.3% growth for the second quarter.

Staying open late might help boost traffic at existing stores, and Chipotle’s high cost means opening new stores isn’t always available as an option. The average check at Chipotle is about $US12, nearly twice as much as the $US6 you’ll spend at McDonald’s, according to Technomic.

“Chipotle has to be in areas that serve middle and upper-income customers, which limits the number of restaurants they can open,” Tristano says. “McDonald’s can open in low-income neighbourhoods.”

The company also said it is using promotions, like buy one get one free burritos, to lure customers.

“It’s a lot easier to serve a few customers at a higher price point, and Chipotle has plenty of options to drive sales” Tristano said.

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